Ideas for investing £70k now for uni in 2018?

anselld

Returns in the next 12 months is a minor consideration in the overall scheme of things.

The big decision is whether our not to self fund Uni. If you believe the Martin Lewis spin that it should not be called a debt but a graduate contribution, then he should invest his money and take out the loan (not sure what the PC term for loan is). However, if he is confident of maintaining a high graduate income he will be much better off by avoiding the punitive interest rates charged on the student [STRIKE]debt[/STRIKE] contribution.

Making that decision first is important because if money is to be invested long term and Uni funded by loans then the stockmarket should be the best place. If he needs access then something more short term would be needed.

Incidentally, BTL property is OK in the short term, but his third share will mean he will incur 3% SDLT surcharge on any future residential purchase. Not a problem for a few years I guess but he should probably have a plan to dispose of his share if he needs to and before he incurs too much CGT liability.

Keep_pedalling

maxie014 wrote: »

Just dont give him access to all the cash,one of my sons friends was a highly sensible lad who burned through his 27k inheritance in the first year of uni!!!!!!

The money belongs to the son as soon as he hits 18, the OP had no right to prevent him accessing any of it.

brasso

All depends on his/your risk appetite, and what his/your objective is.

If it's preservation of capital at all cost, then put it in a savings account and be satisfied that inflation hasn't reduced it by too much over the year.

If you actually want to make some money, well, if it was me I would put it all in a small collection of funds with a good recent track record, and hope there will no crash in the next 12 months. Yes, this would be considered foolhardy by many but that simply reflects a difference in attitude. I'm not a very cautious investor, which is why I've generally done very well, year on year. But I've no doubt that I'm due for a rude awakening, just as I had in 2008. Let's hope it's not too soon!

By and large, the shorter the time frame, the more risky it is to invest. One year is a very short time frame, and no responsible advisor would recommend it. But as I've admitted, I'm not particularly responsible in my approach.

Voyager2002

A small portion should perhaps go into peer-to-peer lending, providing a decent return (albeit with some risk) yet remaining easily accessible for his studies.

steampowered

He has 1/3 share of a property (rented out) which gives him about £420 month (currently saved into an JISA)

The property has already made him ineligible for government help through schemes like help to buy. If he wants to buy a house in a few years I suspect it will also mean he gets slammed for additional stamp duty.

I suspect that holding property is an unwise investment choice for this young man, and that he should be looking to get out of that investment (or at least have an exit route) by the time he wants to a property of his own.

silvermum wrote: »

Not yet sure whether it will make sense for him to get a student loan, as he may be a high income earner in the future, based on his degree choice.

He should be taking the student loan.

He will need to take on debt at some point - most likely to afford a place to live - and it makes zero sense to convert student loan repayments into actual debt. Have a good read of http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes.

silvermum

Unfortunately, the property was bought before LISAs were launched, so there was no way of knowing that it would be a disadvantage in the future.
There is a defined exit route for him in the future in that my husband and I would be happy to buy out his share. Alternatively, he could potentially buy out the other shares if he wanted to live in it himself. It is well placed - just a 30-minute commute into London.

"There are no circumstances in which it makes sense to self-fund uni. He should be taking the student loan."
Yes, I've read the article on this website, but my understanding is that there are a few circumstances when it may make sense to self-fund uni and I think my son's situation could end up being one of them. His degree has one of the highest graduate starting salaries and he could end up in the 'would end up paying it off within 30 years' group (Approx. 26 years, according to my estimates in the calculator...)
Given that the interest on student loans currently accrues at 6% (and will rise if inflation keeps rising) then he'd have to be earning at least 6% from his lump sum to 'break even' as it were.

I agree that he may need to take on debt in the future to e.g. buy a house, but I would hope that mortgage rates might be better than 6%?

Or am I missing something here?

I guess it might be worth gambling on a future Labour government writing off student debt/loans I suppose....

Tom99

I agree that at 6% the student loan interest is high. Maybe take the loan and when your son finishes education decide then what to do then - pay it back or keep it.

CKhalvashi

Keep_pedalling wrote: »

The money belongs to the son as soon as he hits 18, the OP had no right to prevent him accessing any of it.

A more sensible solution would be for OP's son to ask OP to hold the money on trust for him, which I'm sure a fairly sensible 18 year old would do.

I'm a lot older than 18 and if I have access to money I will be tempted to spend it, where if I don't have it to hand and it'll take some effort to get it I won't be bothered to go to that effort.

silvermum

Tom99 wrote: »

I agree that at 6% the student loan interest is high. Maybe take the loan and when your son finishes education decide then what to do then - pay it back or keep it.

Thanks - yes- that might be the option which keeps the maximum number of options open, whilst incurring only limited interest charges (which could be partially offset by saving/investing his current lump sum.

silvermum

Keep_pedalling wrote: »

The money belongs to the son as soon as he hits 18, the OP had no right to prevent him accessing any of it.

I'm not sure where the idea came from that I was trying to prevent him accessing any of it? On the contrary, we are having joint discussions about how best to manage it!